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Indian stock market and companies daily report (February 20, 2013, Wednesday)

Contributed by Angel Broking

The Indian market is expected to open marginally positive, mirroring SGX Nifty which is trading marginally higher in the opening trades. Major Asian indices are also trading in the positive zone.

The US markets ended on a positive note on Tuesday following MondayRs.s PresidentRs.s Day holiday. The market moved notably higher following the rally in Europe and optimism about further merger-and-acquisition activity which helped generate continued buying interest. European stock markets posted broad-based gains on Tuesday, boosted by stronger-than-expected German ZEW economic sentiment data. The ZEW economic expectation index jumped 16.7 points to 48.2 in February, exceeding analysts's expectations of 35.0 points.

Back home in India, Indian shares rose notably on Tuesday, with gains accelerating in the afternoon helped by firm European cues. Going ahead, investors are likely to keep an eye on reports on housing starts and producer price inflation as well as the release of the minutes of the Federal Reserve's latest monetary policy meeting.

Markets Today

The trend deciding level for the day is 19,588 / 5,923 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,719 - 19,802 / 5,964 - 5,988 levels. However, if NIFTY trades below 19,588 / 5,923 levels for the first half-an-hour of trade then it may correct up to 19,505 - 19,374 / 5,899 - 5,859 levels.

MSIL expects a volume growth of 5.5-6% in FY2013

Maruti Suzuki (MSIL) has indicated that it expects a volume growth of 5.5-6% in FY2013. The volume growth expectations of the company are broadly in-line with the guidance that the Management had given in October 2012. The volume growth expectation of the company is also broadly in-line with our FY2013 estimates of ~5%. We however, expect the companyRs.s volumes to rebound in FY2014 and post a growth of 13% driven by availability of additional diesel engines and revival in demand for petrol cars led by easing of interest rates. On the operating front, we expect EBITDA margins to improve ~140bp in FY2014 to 8.9% led by a favorable product-mix and currency movement, lower discounts and ongoing cost reduction initiatives. At Rs.1,512, MSIL is trading at 15.5x FY2014E earnings. We maintain our Neutral rating on the stock.

3QFY2013 Result Reviews

GSK Pharmaceuticals (CMP: Rs.2,103/ Target: -/ Upside: -)

For 4QCY2012, Glaxo PharmaceuticalsRs. results were ahead of our expectations on the net profit front, while the sales were just in line with expectations. Overall, net sales came in at Rs.657cr, tad below the expectation of Rs.680cr, and registering a yoy growth of 16.1%. The top-line growth was driven by a 15.9% yoy growth in the pharmaceuticals segment. On the operating front, gross margin came in at 57.3%, ie a contraction of 170bp, which along with a 32.2% yoy growth in the other income led the OPM to contract by 300bps to 27.2%. The OPM however, was higher than our expectation of 26.8%. Apart from this the higher than expected other income aided the adjusted net profit to come higher than expectation at Rs.158.5cr, registering a yoy growth of 15.9% yoy. We maintain our Neutral recommendations on the stock.

Economic and Political News

- India set to add 17,461MW power capacity in FY2013

- CCI to clear most of oil and gas blocks in two weeks: Montek Singh

- Government receives 316 applications from PSUs for 17 coal mines

- Railway freight corridors to get enhanced government funding this year

- Wheat procurement may rise 15% to touch record 44mn tone

Corporate News

- IndiGo, Jet slash fares by up to 50%

- PFC launches Rs.100cr tax free bonds issue

- BP-RIL to invest US$5bn in flagging KG-D6 fields

- Tata Steel to set up manufacturing facility in UK

- Zylog Systems to raise US$25-30mn through equity